So it's no surprise that the smart fortwo has experienced relative success in the city by the bay. Had Chrysler bothered to put a Fiat dealership in San Francisco, the city would look like Italy, with 500s on every corner. That oversight leaves the door open for the Scion iQ to become the next official San Francisco city car.

If you live in a part of the United States with Ford F-350-sized, white-line-delineated parking spots and drive ten miles from home to the nearest Wal-Mart, you'll look at the pictures of this pint-size new car and think it's the stupidest thing since, well, the Smart. We understand. But if you live somewhere like San Francisco -- or Boston, or Portland, or West Hollywood -- where a parking spot consists of any sufficiently long gap between two other cars, you need to sell your Smart now and put your name on the list to buy a Scion iQ.

Why? Let's be honest for a second: cute as the Smart ForTwo is, it's not very good to drive. It's doesn't do well on the highway and gets buffeted by crosswinds. Its automated manual transmission is rough enough to give you whiplash. It doesn't have enough power to keep up with traffic, much less keep up momentum on steep hills. It has no back seat for your drunk friend to catch a ride home from the bar. It has no power steering. It has no crumple zones in case you crash it. The interior materials make Tyco toys look like Rolls-Royce quality masterpieces. Need we continue?

All of that is changed with the Scion iQ, which has been on sale since late 2008 in Europe and in Japan as the Toyota iQ. Yes, it's bigger than the Smart, but by only fourteen inches. [For comparison, the Fiat 500 is 19.5 inches longer; the MINI Cooper is 25.5 inches longer.] That means the iQ still squeezes into spots normally reserved for motorcycles, birds, and litter. And it may, depending on where you live, be small enough to legally park perpendicularly. Unlike the ForTwo, it's brilliant to drive. In fact, from behind the wheel, it's Toyota's best small car.

It's also really nice to look at. Where the Smart is effectively as tall as it is wide, the iQ stands tough like a bulldog, seven inches wider than it is high. That extra width translates directly into passenger shoulder space, even though the rear seat passengers ride well inboard of the front.

Rear seat? Yup.

Scion calls the iQ a 3+1 seater, and that's an apt description: three normal adults, one small child. The dashboard is asymmetric, allowing the front passenger seat to slide further forward than the driver's seat, making enough room in the back for a six-footer. It's certainly no stretch limo back there, but it's more than roomy enough for a half-hour trip. The driver's rear seat is only really usable if both occupants on the left side are smaller than, say, five feet tall.

The person in the front left seat will have the best seat of all: the iQ delights with accurate, communicative steering. It also has a comically small turning diameter (Scion quotes 25.8 feet, compared to the Smart's 28.7 feet). Thanks to a CVT keeping peak thrust on tap at all times, the 2127-pound iQ feels livelier than the official 0-to-60-mph time of 11.8 seconds, and the iQ cruises quietly and easily at brisk highway speeds, with no apparent susceptibility to crosswinds and no aversion to steep grades. We were able to coax the iQ close to its 100-mph top speed up a steep incline and happily didn't need to use any of the car's eleven (!) standard airbags.

The iQ uses the first belt-type continuously variable transmission we've experienced from Toyota, and while it's not quite as good as the best (Nissan's), it's excellent overall. It does a good job at continually varying engine speed under quick acceleration, even performing pseudo-shifts to break up the noise. The iQ's 1.3-liter four-cylinder engine is vocal, and its modest output means noise is omnipresent, but it's never intrusive. And thanks to a wide ratio spread with a short low ratio, the iQ squirts off the line, even up San Francisco's notoriously steep hills.

From behind the wheel, you keep forgetting that you can reach back and touch the rear window. The iQ feels a couple of sizes bigger than it is -- you expect to see the rear half of a Corolla when you look through the rearview mirror. The suspension does a tremendous job of masking the short wheelbase: the ride is never choppy. And unlike in the Smart, the iQ's rear suspension actually absorbs bumps.

The interior materials are excellent, especially when compared to a ForTwo, and the seats are comfortable enough for city duty. The iQ could use a right-side armrest for the driver, but the surfaces you're most likely to touch (the steering wheel and shifter) feel expensive. In fact, the steering wheel is wrapped in leather and comes standard with stereo controls.

As usual, Scion's choice of radios leaves something to be desired. Even the top-spec system, a 200-watt Pioneer system with four speakers, offers poor sound quality. All of the stereos we played with felt aftermarket in their usability. Still, like all 2012 model year Scions, the iQ also comes with standard Bluetooth and HD radio. And besides, stereo systems are easy to upgrade in the aftermarket. You can't do much about fuel economy, and the iQ shines there: Scion estimates that the iQ will score 37 mpg combined on the EPA cycle (36 mpg city, 37 mpg highway). For comparison's sake, the Smart ForTwo achieves 36 mpg combined -- 33 in the city and 41 on the highway. The 41-mpg highway rating shows that the Smart's narrow shape clearly provides aerodynamic benefits at highway speeds--but it comes at the expense of straight-line stability.

The iQ goes on sale on the West Coast in October, with other markets to follow--the Gulf states and the Southeast in January 2012, New York and the remainder of the East Coast in February, and the rest of the United States in March. Base price is a no-haggle $15,995, and while accessory and option pricing hasn't been finalized, we expect a fully loaded iQ to top out at well below $20,000, where a base Mini Cooper starts.

If you're thinking "I could have a loaded Corolla for that," you're forgetting that big cars with trunks don't fit in tiny city parking spots in San Francisco. And cities with small parking spaces tend to also be cities with huge costs of living, so sticker price is less of an issue. San Franciscans already gobble up ForTwos (which cost about the same as the iQ) and Mini Coopers (which are vastly more expensive), not to mention seriously premium Audi A3s.

We look forward to spending more time with the iQ, but our initial impressions make it clear: when it comes to iQ versus Smart, there's only one smart choice.